Tuesday, March 20, 2012

Class action against alcohol/caffeine blend not preempted

Cuevas v. United Brands Co., Inc., 2012 WL 760403 (S.D.Cal.)

Cuevas (there’s a spelling inconsistency in the opinion, but
I’m going with the caption) brought a putative class action against United
Brands for selling a flavored caffeinated alcoholic beverage, JOOSE, which had
9.9-12% alcohol by volume and about 125 mg of caffeine (lowish end of a cup of
coffee, more than 3x than in a Coke).
Joose went on the market in late 2007, and in November 2010, the FDA
sent defendant a warning letter stating that “based on the publicly available
literature, a number of qualified experts have concerns about the safety of
caffeinated alcoholic beverages.”
Studies indicated that caffeine reduces subjective perception of
intoxication but didn’t improve diminished motor coordination or slower visual
reaction times. The FDA concluded that,
as used, caffeine was an unsafe food additive, rendering the product
adulterated. United Brands discontinued
shipping Joose.

Cuevas bought three cans of Joose in 2010, and alleged that
she saw ads and looked at the labeling before she bought. She alleged that defendant failed to disclose
the amount of caffeine in the product or the risks associated with caffeine
added to an alcoholic beverage, and that these would have been material to her
decision to buy.

The court rejected defendant’s motion to dismiss. First, federal alcohol labeling law didn’t
preempt the claims. Federal law mandates
the warning on alcoholic beverages, and bars other state requirements for any
statement “relating to alcoholic beverages and health” on a container. Because ads and consumer protection are
traditionally state regulatory areas, the court applied a presumption against
preemption. The court read federal law
as covering statements regarding health risks “associated with consuming or
abusing alcohol.” However, there was no
reason to think Congress intended to ban warnings “regarding other
non-alcoholic ingredients in an alcoholic beverage that may have adverse health
effects in and of themselves or when combined with alcohol.” Cuevas was arguing that United Brands should
have warned about the interaction of caffeine and alcohol, not about alcohol
per se. Thus, there was no preemption,
either express or implied. (And to the
extent her claims were based on ads other than packaging, they clearly weren’t
preempted, since—unlike federal cigarette law—federal alcohol law doesn’t
address warning statements in advertising or promotion.)

Cuevas also had standing under the UCL because she alleged
sufficient economic injury in that she bought something she wouldn’t have
bought if she’d known the truth. She
properly alleged a violation of the CLRA from failure to disclose a material
fact that was within defendant’s superior knowledge. (In a footnote, the court held that Rule 9(b)
applied, and that plaintiff’s allegations regarding ads she saw lacked the
requisite specificity, but she did specifically allege that she looked at the
product containers before buying them and that there were no warnings; the
complaint included pictures of the labels of those specific products.)

Finally, though she didn’t state a claim for breach of
express warranty, she did state a claim for breach of the implied warranty of
merchantability. California law bars a
product liability action if a product is inherently unsafe and known to be so
by the ordinary consumer, and the product is also a common consumer product
intended for personal consumption, “such as sugar, castor oil, alcohol, and
butter.” United Brands argued that this
provision barred plaintiff’s claim, but the court disagreed, as it had with the
preemption argument: “Plaintiff's claims are not based on the inherent dangers
of alcohol but on the undisclosed effects of caffeine and alcohol combined.” Indeed, the Restatement (Second) of Torts,
from which this provision is derived, specifies that adulterated products can
be unreasonably dangerous: “Good whiskey is not unreasonably dangerous merely
because it will make some people drunk, and is especially dangerous to
alcoholics; but bad whiskey, containing a dangerous amount of fuel oil, is
unreasonably dangerous.”

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